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[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]

 
                           WOMEN IN BUSINESS

=======================================================================

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                   GOVERNMENT PROGRAMS AND OVERSIGHT

                                 OF THE

                      COMMITTEE ON SMALL BUSINESS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                               __________

                             WASHINGTON, DC

                               __________

                              JUNE 8, 2000

                               __________

                           Serial No. 106-62

                               __________

         Printed for the use of the Committee on Small Business

                     U.S. GOVERNMENT PRINTING OFFICE
66-167                       WASHINGTON : 2000

                      COMMITTEE ON SMALL BUSINESS

                  JAMES M. TALENT, Missouri, Chairman
LARRY COMBEST, Texas                 NYDIA M. VELAZQUEZ, New York
JOEL HEFLEY, Colorado                JUANITA MILLENDER-McDONALD, 
DONALD A. MANZULLO, Illinois             California
ROSCOE G. BARTLETT, Maryland         DANNY K. DAVIS, Illinois
FRANK A. LoBIONDO, New Jersey        CAROLYN McCARTHY, New York
SUE W. KELLY, New York               BILL PASCRELL, New Jersey
STEVEN J. CHABOT, Ohio               RUBEN HINOJOSA, Texas
PHIL ENGLISH, Pennsylvania           DONNA M. CHRISTIAN-CHRISTENSEN, 
DAVID M. McINTOSH, Indiana               Virgin Islands
RICK HILL, Montana                   ROBERT A. BRADY, Pennsylvania
JOSEPH R. PITTS, Pennsylvania        TOM UDALL, New Mexico
JOHN E. SWEENEY, New York            DENNIS MOORE, Kansas
PATRICK J. TOOMEY, Pennsylvania      STEPHANIE TUBBS JONES, Ohio
JIM DeMINT, South Carolina           CHARLES A. GONZALEZ, Texas
EDWARD PEASE, Indiana                DAVID D. PHELPS, Illinois
JOHN THUNE, South Dakota             GRACE F. NAPOLITANO, California
MARY BONO, California                BRIAN BAIRD, Washington
                                     MARK UDALL, Colorado
                                     SHELLEY BERKLEY, Nevada
                     Harry Katrichis, Chief Counsel
                  Michael Day, Minority Staff Director
                                 ------                                

           SUBCOMMITTEE ON GOVERNMENT PROGRAMS AND OVERSIGHT

                 ROSCOE G. BARTLETT, Maryland, Chairman
MARY BONO, California                DANNY K. DAVIS, Illinois
PATRICK J. TOOMEY, Pennsylvania      RUBEN HINOJOSA, Texas
RICK HILL, Montana                   CHARLES A. GONZALEZ, Texas
                        Nelson Crowther, Counsel

                            C O N T E N T S

                              ----------                              

                               WITNESSES

                                                                   Page
Hearing held on June 8, 2000.....................................     1
    Henderson, Laura, President, Prospect Associates.............     3
    Parker, Suzane W., President & CEO, Ward Global Enterprises..     6
    Keenan, Linda M., Director of Association Marketing, Lucent 
      Technologies...............................................    10
    Neese, S. Terry, CEO & Founder, Terry Neese Personnel 
      Services...................................................    12
    Wirth, Diane M., Representative, Women's Business Institute..    15
    Mayer, Glen, United Parcel Service...........................    17

                                APPENDIX

Opening statements:
    Bartlett, Hon. Roscoe G......................................    32
Prepared statements:
    Henderson, Laura.............................................    34
    Parker, Suzane W.............................................    40
    Keenan, Linda M..............................................    46
    Neese, S. Terry..............................................    53
    Wirth, Diane M...............................................    57
    Mayer, Glen..................................................    63

                 FOCUS ON WOMEN'S BUSINESS ENTERPRISES

                              ----------                              

                         THURSDAY, JUNE 8, 2000

              House of Representatives,    
        Subcommittee on Government Programs
                                     and Oversight,
                               Committee on Small Business,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10:40 a.m., in 
Room 2360, Rayburn House Office Building, Hon. Roscoe G. 
Bartlett (chairman of the Subcommittee) presiding.
    Chairman Bartlett. Our subcommittee will be in order. Would 
the witnesses please take their seats at the table.
    Good morning and welcome to this hearing of the 
Subcommittee on the Government Programs and Oversight of the 
Committee on Small Business. A special welcome to those who 
have come some distance to participate and to attend this 
meeting.
    On October 8, 1997 and March 25 in 1999, the Subcommittee 
on Government Programs and Oversight held hearings to showcase 
women's business enterprises on a national level and to examine 
issues of concern to women entrepreneurs such as the 
availability of capital. These were the first hearings in 
almost a decade devoted to women in business.
    Why this commitment to help women start new businesses or 
grow existing enterprises? Because it is the right thing to do, 
and because women entrepreneurs are a key dynamic in this 
Nation's present prosperity. The following statistics which are 
from the Small Business Administration, speak for themselves: 
The number of women-owned businesses increased 89 percent over 
the last decade to an estimated 8.5 million. Second, women-
owned businesses generated $3.1 trillion in revenue, an 
increase of 209 percent between 1987 and 1997. Third, more than 
1.4 million women-owned businesses with employees generated 
$2.8 trillion in revenue. The number of women-owned businesses 
with employees grew 46 percent from 1987 to 1997. And fourth, 
revenue of women-owned businesses with employees grew 221 
percent from 1987 to 1997.
    This hearing is a continuing commitment to spotlight the 
vital nature of women's business enterprises to the economy of 
this Nation as a whole and to the communities in which we live. 
This hearing provides, as did the previous ones, a forum for 
learning how the private sector is succeeding or failing to 
meet the needs of women in business and to focus attention on 
those deficiencies that may exist.
    The hearing also provides an opportunity for women business 
owners to express their views as to the effectiveness of 
Federal Government programs designed to help small business 
owners and those who aspire to go into business for themselves. 
Congress needs to know whether these programs are succeeding or 
failing.
    Lastly, this hearing provides a vantage point for 
identifying problems that women business owners encounter as 
the result of overregulation and burdensome government 
paperwork. Is the Federal Government a friend or a foe?
    In recent years Congress has increasingly supported 
legislation aimed at helping women start and grow businesses. 
The Committee on Small Business has supported the National 
Women's Business Council, Women's Business Centers, and the 
Microloan Program.
    Proposed changes in the 7(a) loan program will help make 
loans more readily available to women entrepreneurs. It is 
hoped in the near future that the SBA will be totally out of 
the business of approving loan applications. This is the case, 
presently, with respect to more than half of the dollar amount 
of loans presently being made. The hometown banker will be the 
decision-maker, not some bureaucrat in a remote location who 
does not know the lender.
    [Mr. Bartlett's statement may be found in appendix.]
    Chairman Bartlett. Again, good morning and welcome to this 
hearing of the Subcommittee on Government Programs and 
Oversight of the Committee on Small Business. Thank you very 
much for coming to the hearing. Let me now introduce our 
witnesses.
    Ms. Laura Henderson, President and CEO, Prospect 
Associates. She is a member of the National Women's Business 
Council.
    Ms. Suzane Ward Parker, President and CEO Ward Global 
Enterprises, board member, National Black Chamber of Commerce.
    Ms. Linda Keenan, director of association marketing, Lucent 
Technologies.
    Ms. Terry Neese, President and CEO, Terry Neese Personnel 
Services, Incorporated, cofounder, Grassroots Impact 
Incorporated.
    Ms. Diane Wirth, President, The Solution Works, 
Incorporated, board secretary, Women's Business Institute.
    Mr. Glen Mayer, corporate supplier, diversity coordinator, 
United Parcel Service.
    Thank you all very much for being here at the hearing, and 
we will begin with the testimony. Oh, Danny Davis has joined 
us. Mr. Davis, thank you very much for joining us and any 
comments you would like to make before our witnesses testify?
    Mr. Davis. Well, thank you very much, Mr. Chairman, and let 
me thank you for calling this hearing. I think it is a very 
important one and especially one that we need to pay a great 
deal of attention to. Women entrepreneurs are an increasingly 
significant part of the United States economy. Women, of 
course, own more than 8 million businesses that account for 
approximately one third of all U.S. businesses and are starting 
businesses at twice the rate of men.
    Surrounding by these stirring statistics, it is the fact 
that women still encounter numerous obstacles trying to start, 
maintain or expand the business; obstacles which must be 
eliminated if we are ever to realize the full potential of this 
dynamic sector of our economy.
    Consequently, the programs offered by the Small Business 
Administration and women centers provide the healthy social and 
economic environment necessary to cultivate a fledgling 
business. In spite of all these programs and all of these 
efforts, and in spite of the fact that we have come a long way 
towards the development of creating a fair and equitable 
playing field, we realize that there is still some distance to 
go, so a hearing like this one should indeed help us along the 
way, and so I thank you, Mr. Chairman, and look forward to the 
discussion.
    Chairman Bartlett. Thank you for your remarks. I frequently 
tell audiences that women-owned small businesses are growing, 
as you indicate in your remarks, at twice the rate of male-
owned small businesses. I remind the bankers they have a lower 
bankruptcy failure rate. I also note that they are better 
employers. Women are different than men. Our military has 
trouble figuring that out, but they are different. Women are 
more empathetic, they are more compassionate, and I am not 
surprised that they are better employers. For those same 
reasons,they are better corporate citizens.
    In spite of all these things, women still have many 
impediments in going into business, and we are focusing 
primarily on availability of capital and whether our government 
programs are helping to make capital more available to our 
women-owned small businesses.
    So we will begin with the testimony of Ms. Laura Henderson.

   STATEMENT OF LAURA HENDERSON, PRESIDENT AND CEO, PROSPECT 
   ASSOCIATES, AND MEMBER, NATIONAL WOMEN'S BUSINESS COUNSEL

    Ms. Henderson. Good morning Mr. Chairman, Mr. Davis. Thank 
you for giving me the opportunity to testify today. I am 
testifying today in my role as an appointee to the National 
Women's Business Council, which is a bipartisan Federal panel 
that provides advice and counsel to the President and to 
Congress on matters of importance to women business owners.
    The Council has played a vital role in leading policy 
discussions, developing effective strategies which have been 
fundamental to the expansion and recognition of women business 
owners as an integral force in our economy. And I would like to 
submit, for the record, the 1998 annual report of the National 
Women's Business Council.
    Chairman Bartlett. Without objection, and let me say that 
all of your written testimony will be made a part of the 
record, so feel free to summarize it. It will all be a part of 
the permanent record. Thank you.
    Ms. Henderson. Thank you. The Council is being considered 
for reauthorization this year, and I believe you will agree 
with me that the work that the Council does is vital, and that 
we have done very much to create a solid infrastructure that 
has benefited one of the fastest growing segments of our 
economy.
    Twelve years ago in 1988, I testified before the House 
Committee on Small Business in a hearing to explore the 
barriers women business owners face and to identify actions 
that could be taken to enable women business owners to reach 
their potential and contributing to our economy. The subject of 
these hearings was the passage of legislation that took three 
very decisive actions that have had a very major impact on 
businesses run by women. The legislation established the 
National Women's Business Council, and established the Women's 
Business Development Center programs. Perhaps as important of 
any action taken in the history of women business ownership was 
the decision to direct the U.S. Census Bureau to expand the 
collection of business data to include the largest women-owned 
businesses, C corporation. The committee should take great 
pride in the accomplishments of the Council and of the other 
programs that resulted from this landmark legislation. The 
legislation truly changed the landscape for women business 
owners.
    When we came to the hearing in 1988, those of us who were 
women business owners knew that the data that existed did not 
reflect the reality of women business owners. At that time, the 
data said that women-owned businesses had revenues of less than 
$10,000 and had no employees. Today, the data that we have 
documents the potent economic force of women business owners. 
The Census Bureau data continues to serve as the basis for both 
public and private sector research initiatives, and the data 
that we have from The National Foundation for Women Business 
Owners tells us that, in 1999, there were 9.1 million women-
owned businesses in the U.S., employing 27.5 million workers, 
and that means that one out of every four employees worked for 
a business owned and run by a woman, and these businesses are 
generating $3.6 trillion in sales.
    Even more impressive than the expansion is the change in 
employment and revenues of women-owned businesses. Between 1987 
and 1999, employment in women-owned businesses is up 320 
percent and revenues are up 436 percent. This means that not 
only are there more women-owned businesses, but those 
businesses are larger, more substantial.
    Chairman Bartlett. Excuse me, the bell simply means that we 
are now going back into session. They went out of session, they 
recessed briefly after taking a picture of the 106th Congress, 
and so they recessed the House briefly for reasons that I don't 
understand. But now they are back in session. Thanks.
    Ms. Henderson. And these businesses are providing 
increasingly more job creation and making a greater 
contribution to the economy.
    One of the studies that was done in the last couple of 
years that I found most interesting was to look at women-owned 
businesses owned by women of color, and we know that one out of 
eight women-owned businesses is owned by a woman of color, and 
in fact, women of color are the fastest growing segment of the 
women-owned businesses.
    The impact of this data cannot be overstated, not only in 
documenting the power of the women entrepreneurial movement, 
but in the significance of the research in developing effective 
strategies for removing barriers facing women-owned businesses. 
We see that this data has had a phenomenal impact on banks, 
financial institution's and policy-makers.
    The National Women's Business Council has contributed 
greatly to the base of knowledge on women business owners 
through its support of research, and one of the things I find 
best about the Council is that the Council's strategies and 
approaches have been based on research findings. So they are 
not merely just ideas, but they are the results of research 
that sets a solid foundation to the actions the Council takes.
    I would like to tell you of a few of the activities that 
the Council is doing. The first is in the area of Federal 
procurement. Over its life, the Council has focused on 
increasing women-owned businesses participation and Federal 
procurement. We have been concerned that this marketplace has 
been closed to women. We are concerned that the Federal 
agencies have not received the full benefit from the 
capabilities and talents of businesses owned by women; but we 
remain seriously concerned that in spite of many efforts by 
many people, women-owned businesses still receive only 2 
percent of Federal prime contracts, about the same percentage 
that we have received over the past 5 years. If the 5 percent 
goals set by Congress were reached, women would be receiving 
contracts worth $10 billion, a $6 billion increase over what we 
are now receiving.
    I would like to discuss specific activities that the 
Council is sponsoring or endorsing. I would like to submit for 
the record, a Best Practices Guide on contracting with women, 
which emphasizes that the most effective tool for increasing 
procurement with women is the commitment at the top of agencies 
to do business with women. We are also commissioning a study of 
the characteristics of women-owned firms who have been 
successful in winning more than $5 million in government 
contracts.
    This study will identify the characteristics and the 
opportunities which have enabled these women-owned firms to be 
successful in this market, and these findings will serve as the 
basis for developing policy and programmatic recommendations to 
assist other women entrepreneurs in gaining access to this 
market.
    The Council also supports and urges the expansion of the 
DOD Mentor Protege Program to include women-owned businesses. 
One of the exciting activities that the Council has had in the 
procurement area is to assist in the development of a Web site, 
www.WomenBiz.gov, that willprovide a single point of entry to 
Internet information on doing business with the Federal Government, and 
will simplify access to information and contracting opportunities.
    Another area that the Council has been very involved in is 
that of access to credit. We have been watching women business 
owners' access to banking and have now moved actively into 
researching the next financial frontier for women business 
owners, access to the equity market. Women-led technology 
companies are the newest on the scene, and their access to 
investment capital will make the difference between success and 
failure.
    The Council has taken the lead in establishing initiatives 
to ensure access to the equity markets for women entrepreneurs. 
One of the initiatives is to create a Best Practice Guide on 
women's access to credit. The Council and the Milken Institute 
will issue a report this summer that identifies financial 
strategies that have been successful in increasing access to 
credit for women launching and growing their businesses, and 
which deserve replication.
    The Council is also hosting a series of very exciting 
venture capital forums around the country, showcasing women-led 
businesses before, private corporate, and venture capital 
investors. This series of forums is called Springboard2000. The 
first forum in Silicon Valley presented 26 companies that, as a 
result of their involvement in the forum, have raised $140 
million in capital. A very exciting outcome. We are having 
these forums around the country, and I would like to invite all 
of you to the next forum, which will be held in Dulles, 
Virginia, at AOL's headquarters on July 11th and 12th.
    In addition, the Council has hosted, in 1996 and 1998, 
national economic summits to examine the critical issues facing 
women business owners and to develop a consensus agenda. Summit 
'98 resulted in the development of a Master Plan of Action, 
those serving to foster the growth and development of women-led 
businesses and the economy as a whole. One of the critical 
consensus issues from that summit is the need for development 
of women business owners as leaders and advisors on national, 
State, and local levels. The Council has made it a priority to 
work with women leaders in each of the 50 States to support 
their involvement in local decision-making.
    Women entrepreneurs have much expertise to offer in policy 
development, and we are assisting them in assuming their seat 
at the table. Further, we are focusing many of our programs on 
the local and regional basis. For example, Springboard2000. We 
believe that the success we have achieved focusing on a 
national agenda must be moved to a more local strategy.
    In conclusion, the Council has been extraordinarily 
effective in fulfilling its role as advisor to Congress and the 
President. Even more important, the Council has been active in 
defining what actions are imperative to ensure that our Nation 
will benefit from the full potential of the fast-growing, 
dynamic, vibrant part of our economy. The Council has 
accomplished an enormous amount, and women-owned businesses and 
our economy have benefited.
    The Council has been a catalyst for making our dreams come 
true. And I believe that the Council is fundamental in 
achieving our goals for the future. As a member of the Council, 
I know that none of these accomplishments would have been 
possible without the support of this Committee. I thank you for 
your support over the past 12 years and seek your support in 
the Council's reauthorization. Through this reauthorization, 
you support the growth and success of women who are starting, 
leading and growing over one third of our Nation's businesses. 
Thank you.
    Chairman Bartlett. Thank you very much.
    [Ms. Henderson's statement may be found in appendix.]
    Chairman Bartlett. And now the testimony of Suzane Ward 
Parker.

STATEMENT OF SUZANE WARD PARKER, PRESIDENT AND CEO, WARD GLOBAL 
   ENTERPRISES, AND BOARD MEMBER, NATIONAL BLACK CHAMBER OF 
                            COMMERCE

    Ms. Parker. Thank you. Chairman Bartlett, Ranking Minority 
Member Davis, committee members, thank you for allowing me, 
Suzane Ward Parker, President and CEO of Ward Global 
Enterprises, and a member of the board of directors of the 
National Black Chamber of Commerce, the opportunity to present 
to the committee on the issues of women business enterprises 
and the availability of capital.
    Let me first give you a little bit of background and 
explain that Ward Global Enterprises is a global company with 
two retail stores selling beauty supply products here in the 
United States in Washington D.C. And Peoria, Illinois. With the 
ultimate growth strategy of eventually franchising the 
operation nationwide, thereby offering opportunity to other 
African American entrepreneurs through the creation of jobs, 
purchasing of goods and services and providing community 
participation through scholarships and mentoring. Since our 
entry into this business, we have been able to provide 
scholarships for minority students in Illinois and have 
recently started a scholarship fund for the Howard University 
Business School.
    Additionally, our global reach extends to West Africa to 
the country of Ghana, where we have established an import 
business as distributors of hair care products for Soft Sheen 
International, a division of Loreal. Finally, the company will 
be launching a Web site within the next few weeks, 
CEOSISTER.COM, that is designed to offer women of color 
entrepreneurs information, networking and learning 
opportunities that will help enhance and promote their 
businesses.
    I welcome the opportunity to come before this distinguished 
panel to discuss my experience as an African American woman and 
entrepreneur, and to share with you the perspective of many 
other women of color who have had similar experiences.
    As you know, women have joined the entrepreneurial ranks at 
an astonishing rate, and you have heard some of the statistics 
already. And we are projected by 2005 to increase ownership by 
77 percent and to generate close to $4 trillion in revenue. 
This is in spite of the fact that we have not had the same 
access and availability to capital and contracts as majority 
males. Businesses that should be up and running and mature are 
still at the starting gate because of this critical issue.
    I continually hear from minority women with fantastic ideas 
for businesses that, at the same time, relate tales of woe 
regarding inability to secure capital. These businesses range 
from technology, trucking, manufacturing, consulting services, 
wholesale trade, and the list goes on and on. These are very 
talented individuals, many who have held executive positions in 
our country's finest corporations and business schools; these 
are well-trained, experienced and technologically competent 
people but lacking one thing, capital.
    Let me first address the issue of capital. Obviously access 
to capital is a key ingredient to the success of every 
business. However, it is the case, the rare case, when a woman, 
and especially a minority woman, has been able to secure 
financing prior to opening a business. I have yet to meet one 
businesswoman, minority or majority, who has been able to 
secure initial financing for a business venture, therefore 
tremendous talent is wasted and delay experienced as a result 
of having to find nontraditional sources of funding, which can 
be expensive and risky.
    The greater loss here, however, is the contribution and 
impact that we know minority women entrepreneurs can make to a 
community and to the labor market through the creation of jobs 
andimprovement to economically challenged areas. In 1999, women 
business ownership increased 103 percent. The economic impact of those 
businesses resulted in an increase in employment of 320 percent, and a 
growth rate in sales of 436 percent. These are impressive figures, 
considering the rate of traditional funding for those businesses is not 
consistent with the rate of growth. Clearly, the disparity of funding 
and the impact of those decisions will have an immediate effect and 
long-term impact to our economy.
    Many women are discouraged from even considering loans due 
to a number of factors; one is fear of rejection. The reception 
one gets when approaching a bank is less than welcoming. The 
typical response from a bank officer is to hand you a stack of 
brochures and send you on your way. There is no attempt to set 
up a consultation with a bank official to help guide you 
through the process or answer questions. Unless you are 
persistent and a bit pushy, you will not be able to get in 
front of a decision-maker.
    The level of paperwork. Many women, after approaching a 
bank and then being told the loan must be SBA secured, are 
turned off by the ensuing lengthy process and the burdensome 
paperwork.
    Let me also add that there are banks that use the SBA loan 
guarantee as a way to discourage women from applying. Too 
often, the banks, without a full picture, will very quickly 
require the SBA guarantee before completely reviewing the 
applicant's file. The level of consideration and receptivity 
toward reviewing and writing the loan of a minority woman 
generally must be tied to the SBA. The banking industry appears 
to want no risk whatsoever as it relates to minority women. The 
end effect of those decisions is that it does lengthen the 
process and provides greater documentation burden on the 
business owner.
    Divorced women have the additional burden of having to not 
only account for themselves, but must also explain financial 
decisions that a former spouse may have made both positive and 
negative that now effect that financial standing.
    As a global entrepreneur, finding finance options to start 
up or enhance a foreign operation is next to impossible. With 
the exception of letters of credit, my experience of 
researching alternatives for manufacturing operations overseas 
have led to continued frustration and dead ends. The appetite 
of U.S. banks to consider financing of a non-U.S. venture is 
not there.
    One particularly frustrating experience I had occurred 
after attending a conference on business in Africa and 
listening to a bank representative express the bank's position 
and positive desire to accommodate those types of investments. 
Upon contacting the same individual, I was told that the bank 
would not even consider loans to that part of the world. He 
would not even, as a courtesy, look at my business plan. When I 
inquired why he held negative opinions, I discovered that these 
opinions indicated his level of knowledge of the region was 
outdated and out of touch.
    Unfortunately I found that attitude to be more the rule 
rather than the exception. However, these individuals are the 
decision-makers that make it difficult or impossible to obtain 
financing.
    The other area that needs critical examination is in the 
area of procurement and contracts. Measured in both the number 
and dollar value of Federal contracts, the participation of 
women business owners falls woefully short. Again, although 
women comprise almost 40 percent of small businesses, of which 
12\1/2\ percent are minority women, we only receive 1.7 percent 
of Federal prime contract dollars and 3\1/2\ percent of 
subcontract dollars. Additionally, in 1999, the SBIC only 
awarded one percent of the venture capital program to women.
    Now as we sit here before Congress, I am very encouraged 
that this panel is asking the right questions regarding 
problems and issues. However, I am continually amazed that the 
issue of contract disparity continues to exist, especially 
given the approved governmental structure and funding designed 
to eradicate discrimination in the assignment of contracts with 
the government. The problem is even more acute with women of 
color. Ladies and gentlemen, there are qualified women and 
minorities available with the goods and the service, so I ask 
why can't we receive our fair share. As the United States is 
experiencing one of the greatest periods of business expansion, 
does it make sense that a significant percentage of the 
business world is being left out or granted less than their 
fair share of the total opportunity?
    What is needed for minority women entrepreneurs to be 
successful is equal access and fairness to financial 
institutions and government programs that have unfortunately 
had a history of discrimination. The American dream should not 
be so far out of reach as to be inaccessible, especially given 
the framework that is already there. To address these 
inequities and begin to see real progress, Congress needs to 
critically examine why the disparity in lending exists and put 
the appropriate measures in place to remedy the situation.
    Many of us would also welcome alternatives to traditional 
sources that take into consideration that we do not have the 
luxury of friends and family with financial resources to help 
us get started. Far too many of us without trust funds are 
forced to use our credit cards and mortgage everything to the 
hilt. It is a statistical fact that 60 percent of women-owned 
businesses utilize credit cards and finance companies to get 
started, which indicates that perhaps we are facing barriers in 
accessing traditional credit and clearly paying more for that 
credit.
    If the well-established banks are unwilling to lend to us, 
then we need venture capital firms as well as minority-owned 
banks, and institutions that will see our diversity and 
experience as an asset and give fair consideration for the 
unique challenges we face. The government could take the lead 
in this area by designating part of SBIC funds for exclusive 
use of women- and minority-owned businesses.
    Serious consideration also needs to be given toward 
reducing the paperwork required as well as expediting the 
process. There should be an option to electronically submit an 
SBA application and have the capability to query the status on-
line as well. Too much time and resource is spent chasing the 
bank contact who will typically blame the delay or lack of 
information on the SBA.
    Finally, a proactive approach to access government contract 
information and bidding needs to be addressed. It is truly 
shameful as we discuss disparate treatment that the government 
procurement and contracts process has such a deficient report 
card. The level of contracts awarded to minority women and 
women in general must improve. As all women, and especially 
minority women, continue to pursue their own businesses and 
help strengthen our economy, create jobs and opportunity, it is 
incumbent upon our national leaders to help erase any and all 
barriers to not only their success, but our country's success.
    Again, thank you for the opportunity to address this 
distinguished panel.
    [Ms. Parker's statement may be found in appendix.]
    Chairman Bartlett. Thank you very much for your testimony, 
and now Ms. Linda Keenan.

  STATEMENT OF LINDA KEENAN, DIRECTOR, ASSOCIATION MARKETING, 
                      LUCENT TECHNOLOGIES

    Ms. Keenan. Good morning, Mr. Chairman, Mr. Davis, and 
other members of the subcommittee, and thank you for the 
opportunity to appear before you today on behalf of Lucent 
Technologies. Women business owners have been and continue to 
be an important market segment for Lucent.
    Lucent Technologies designs and delivers the systems 
software silicon and services for next generation 
communications networks for service providers and enterprises. 
And of course, we are backed by the research and development of 
Bell Labs. Today I am going to address two key areas that 
Lucent has provided support for women business owners, 
procurement and marketing.
    Lucent Technologies has proudly supported Minority and 
Women Business Enterprises, and we refer to that as MWBE, 
programs for over 32 years, first as AT&T, and then as Lucent 
when we were formed, after separating from AT&T on October 1st, 
1996. In addition to our procurement focus of our MWBE 
programs, Lucent has formed strategic partnerships with 
associations representing business owners, some of these 
associations include the National Association of Women Business 
Owners, the National Foundation for Women Business Owners, and 
the National Women's Business Owners Corporation, and 
recognizing the opportunities and power of this high growth 
segment, Lucent has created programs to assist women business 
owners to be more successful, more informed, and more effective 
in growing their businesses.
    Now Lucent recognizes that MWBE utilization is not only an 
extension of a social or legislative obligation, but rather a 
strategic asset that offers real benefit to our bottom line of 
profitability. Last year with women-owned businesses, we were 
able to serve our customers more effectively and realize a 
savings of over $47 million. Lucent Technologies spent over $1 
billion with minority and women-owned businesses representing 
about 9.5 percent of our total procurement. Of that $1 billion, 
$461 million was spent on white female-owned businesses, and 
the other 634 million dollar was spent on the remaining 
minority business enterprises.
    By developing ongoing relationships with women business 
owners, Lucent has benefited from a supplier base that is 
experienced, technologically savvy and strategically located, 
and we have a policy of ensuring that qualified women business 
owners have the maximum opportunity to provide us with goods 
and services.
    From a marketing perspective, Lucent has been a premier 
corporate partner of the National Association of Women Business 
Owners since 1997. The relationship with NAWBO has been 
extremely beneficial for Lucent to gain visibility, increase 
brand awareness and loyalty and become better positioned with 
women business owners. Through some of our dynamic marketing 
programs, Lucent has provided tools to NAWBO to help grow its 
membership and educate its members. We have been very 
successful in taking what started as a sponsorship and building 
it into more of a partnership, a real win-win situation.
    I would like to share a few of the marketing initiatives we 
have implemented in conjunction and collaboration with NAWBO. 
As you may know, NAWBO has very aggressive goals to grow its 
membership. As part of our negotiated sponsorship agreement, we 
developed and produced a recruitment video for NAWBO to use 
nationally at the local chapters. It was called, ``NAWBO, It's 
Happening.'' It has been shown throughout the United States and 
has been extremely successful in assisting the local chapters 
to increase their memberships. The video demonstrates the power 
of NAWBO through real-life success stories, interviews and 
examples of the diversity of the NAWBO membership, and I am 
pleased to let you know, too, that ``NAWBO, It's Happening'' 
did win two prestigious industry awards for its quality, 
message, impact and the difference it made in helping NAWBO, 
and the awards were the Aurora Platinum Best of Show Award as 
well as the Communicator Award.
    As we all know in this room, public policy is an important 
focus for NAWBO and last year we produced a multimedia program 
called 20/20 Vision to help NAWBO members learn about the 
economic impact of women business owners and the importance of 
their participation in public policy issues. The 20/20 Vision 
program was training that was developed to inform, educate and 
update NAWBO members on key public policy issues and to engage 
more of the members, get them more involved, hear more voices 
up on Capitol Hill, and get them to participate in transforming 
public policy. The program consisted of a series of seven 
videos, which really highlighted the key issues that NAWBO is 
focusing on with its members, a public policy handbook, and 
then we also do provide each of the members with a customized 
Congressional Directory, so they know who they should be in 
touch with and how to get in touch with them.
    We also sponsor a ``government watch'' section on the NAWBO 
Web site so that all the NAWBO members can be kept current of 
everything happening up here on Capitol Hill. Now NAWBO is 
celebrating their 25th anniversary. Next week is their 
conference, and we are producing another video; again, a tool 
for NAWBO to help grow its membership, and we also have another 
Web-based marketing tool that we developed to help NAWBO and 
Lucent keep an open line of communication so that we can 
continue to build on our partnership and understand the needs 
of NAWBO who are representing the needs of women business 
owners.
    In addition to specific sponsorship of associations, Lucent 
has also been very supportive of providing opportunities for 
women business owners just starting out. We recognize that 
there are a lot of obstacles, and Lucent, in conjunction with 
Working Woman Magazine, sponsored a ``Partners for the Future'' 
grant to honor women entrepreneur start-ups. Two grants were 
awarded to women entrepreneurs who demonstrated creativity, 
business knowledge and the ability to meet unique market needs. 
And each of these honorees received a $5,000 grant, a Lucent 
partner communications system, and, of course, a membership in 
the National Association of Women Business Owners.
    The business owners we have supported have been very 
receptive to our support. I am pleased and honored to let you 
know we did receive the National Corporate Partner of the Year 
from NAWBO and several local NAWBO chapters, and I think more 
important of what I am saying today is really a quote that came 
from one of the letters from NAWBO, and I will share that with 
you.
    ``Each year we look at our corporate supporters and choose 
one whose partnership stands out, a partner that has provided 
not only financial support, but also advice, counsel and 
superlative service to women business owners. Lucent more than 
meets these standards, and we are proud to present you with 
this award.''
    In conclusion, this has been a very successful working 
partnership from both a marketing and procurement area. We have 
been able to support women business owners by increasing our 
procurement objectives year after year, and we will continue to 
do that, and in addition, our marketing sponsorship and 
partnership has enabled us to become more visible in providing 
the information and tools to enable women business owners to be 
successful.
    So I appreciate the time to be here today and I look 
forward to our continued partnership.
    Chairman Bartlett. Thank you for your testimony, and I wish 
the Federal Government was doing as well as Lucent is doing. 
Thank you very much.
    [Ms. Keenan's statement may be found in appendix.]
    Chairman Bartlett. And we will next hear from Ms. Terry 
Neese. Thank you for joining us again.

   STATEMENT OF TERRY NEESE, PRESIDENT AND CEO, TERRY NEESE 
  PERSONNEL SERVICES, INC., AND COFOUNDER, GRASSROOTS IMPACT, 
                              INC.

    Ms. Neese. Thank you. Good morning, Mr. Chairman and 
members of the committee. Ihave to, right on the heels of what 
Linda Keenan said, I have to thank Lucent Technologies for all that 
they have done for women business owners as a whole around this country 
and the partnership between Lucent and women business owners is one 
that should be the envy of many.
    My name is Terry Neese. I am the CEO and founder of Terry 
Neese Personnel Services in Oklahoma and co-founder of 
Grassroots Impact with offices in Oklahoma City and Washington 
D.C. I am past president of the National Association of Women 
Business Owners and their corporate and public policy advisor. 
Grassroots Impact represents several small business 
associations on Capitol Hill, including NAWBO and the National 
Business Association. I offer this testimony today on behalf of 
my companies, Grassroots Impact and Terry Neese Personnel 
Services.
    First, just returning from the National Women's Small 
Business Summit chaired by Senator Bond held in Kansas City 
Missouri this past Monday, I highly recommend that the 
committee obtain the issue recommendations from that summit and 
focus on moving those recommendations through the legislative 
process. To that end, I also recommend that the committee 
establish a task force of small business owners to review the 
recommendations, establish some priorities and work with the 
committee to ensure success.
    That conference was chaired by Senator Bond, Senator Diane 
Feinstein, Senator John Kerry, and it was a bipartisan summit 
focused on issues that affect women business owners.
    Now the technology that was used at that conference to vote 
on the issues that are important to small business was a 
wireless keypad. So we had instant feedback on the top 
priorities for women business owners, but I understand all of 
it will be on their Web site today or tomorrow. So we will have 
the issues very soon.
    The bottom line from what I could view from the answers 
that were coming over from the wireless keypads was access, 
access to capital, access to procurement, access to education 
and training.
    Let me first address procurement. For the past 3 years, I 
and numerous NAWBO colleagues have presented testimony on 
behalf of the National Association of Women Business Owners, 
NAWBO, before this committee previously and many others 
regarding procurement. That testimony called on the Congress to 
hold the administration accountable for the 5 percent 
procurement goal enacted by the 1994 Federal Acquisition 
Streamlining Act. In fiscal year 1999, the departments and 
agencies of the Federal Government awarded prime contracts 
totaling 2.4 percent of the total dollar value of all prime 
contracts to women-owned businesses.
    As you have heard this morning, the National Foundation for 
Women Business Owners recent study shows 9.1 million women 
business owners employing 27.5 million workers and generating 
$3.6 trillion, and they are receiving 2.4 percent of government 
contracts. They make up 38 percent of all businesses in the 
United States and they are getting 2.4 percent of all 
contracts. Is there something wrong with this picture?
    On Tuesday, May 23rd, the President issued an executive 
order to strengthen the executive branch's commitment to 
increased opportunities for women-owned small businesses. In 
addition, that same day, Senate resolution 311 passed the 
Senate unanimously. The resolution authored by Senator Bond and 
cosponsored by Senator Kerry, Senator Landrieu, Senators 
Bingaman, Lieberman and Harkin, urged the President to adopt a 
policy in support of the 5 percent procurement goal for women-
owned small businesses and to encourage the heads of the 
Federal Departments and agencies to undertake a concerted 
effort to meet the 5 percent goal before the end of fiscal year 
2000.
    I encourage and challenge the House of Representatives to 
issue a similar resolution showing your support of this issue. 
While I am encouraged by this show of support for more business 
opportunities for women business owners, the House of 
Representatives must make sure the U.S. Small Business 
Administration acts immediately to implement the President's 
executive order.
    Congresswoman Sue Kelly's resolution is bottled up in 
committee, and I urge you to either move on that resolution or 
author another resolution, and then we will have the 
administration, the Senate and the House standing shoulder to 
shoulder in support of women business owners' procurement 
opportunities.
    Now on to death tax. One of the most pressing issues facing 
women business owners today is the death tax. Many have 
suggested that the estate, gift and generation-skipping tax, 
the death tax, does not affect enough Americans, but many 
families sell out early and pay a 20 percent capital gains tax 
on the appreciation instead of a 55 percent tax rate on the 
fair market value of all their assets. This means that 
businesses are sold and jobs are lost in the community because 
many sell out to larger companies that consolidate and are not 
subject to the estate tax.
    As an example, in the city of Williamsport, Pennsylvania, 
seven family businesses have been sold to large companies 
resulting in the elimination of thousands of jobs in that town. 
As a result of the estate tax, the livelihood of the family 
members who worked in those businesses was eliminated. Bottom 
line, the death tax elimination is all about saving jobs for 
families and their communities.
    The estate gift and generation-skipping tax must be 
eliminated. And I urge this Congress to pass legislation aimed 
at early phase-out or total elimination now.
    Finally, installment sales and cash versus accrual basis. 
The cash versus accrual issue is a day-to-day pervasive issue 
for small businesses, and certainly the membership of the 
National Association of Women Business Owners. The installment 
sales issue only applies when the business is sold. I believe 
the only way to explain both of these issues and really bring 
the message home on a personal basis is to focus on cash in and 
cash out for any individual.
    For example, how would a Federal employee cope with this 
issue if they were told that since their income for the year 
would be $60,000, that they would have to pay their taxes up 
front on the $60,000 before they receive their income? Does 
that sound pretty ludicrous? That is what has happened with 
both of these issues.
    It is inexcusable for Treasury to issue regulations similar 
to the above example and circumvent the Regulatory Flexibility 
Act, SBREFA, and frankly, the legislative process. The Treasury 
employees are not elected by the people of the United States. 
So why are they acting and issuing regulations like they are in 
Congress? Installment sales repeal for accrual basis taxpayers 
must be reversed. Forcing small businesses to pay lump sum 
capital gains taxes on the sale of their businesses is wrong.
    I strongly support the Herger-Sweeney bill, H.R. 3594, to 
repeal last year's modification. I also support the cash versus 
accrual legislation, H.R. 2273, and Senate bill 2246, to 
protect small business. Mandatory implementation of the accrual 
basis accounting would be devastating, taxwise, the first year 
and would necessitate the hiring of a full-time accountant for 
every small business owner.
    Thank you for allowing me the opportunity to voice problems 
and concerns facing women-owned businesses, and your support is 
greatly appreciated in resolving these issues.
    Chairman Bartlett. Thank you very much, and during the 
question and answer period we will have an opportunity to 
explore more of these problems. Thank you very much for your 
testimony.
    [Ms. Neese's statement may be found in appendix.]
    Chairman Bartlett. Now I am very pleased to welcome Diane 
Wirth, who is a constituent and has testified before us before, 
and I see her out in the District because she is a very active 
member of the Women's Business Institute, and contributes a lot 
of her time in helping women entrepreneurs get started on that 
first rung up the business ladder.
    Diane, thank you very much for joining us again.

STATEMENT OF DIANE WIRTH, PRESIDENT, THE SOLUTION WORKS, INC., 
        AND BOARD SECRETARY, WOMEN'S BUSINESS INSTITUTE

    Ms. Wirth. Thank you and good morning, Mr. Chairman, Mr. 
Davis and members of the subcommittee, for allowing me to 
appear before you today to testify on women's business 
ownership issues. As Congressman Bartlett said, I am Diane 
Wirth, president of The Solution Works, which is a technology 
training company, and also the board secretary for the Women's 
Business Institute. My goal during this hearing is to provide 
you some insight as far as the issues surrounding women's 
business ownership, and also to provide you solutions or 
suggest solutions as a purpose of that. There are three areas 
that I am going to focus on this morning.
    The first one is access to resources followed by education 
and training, which someone else alluded to, and also how these 
items then tie into access to capital.
    The Women's Business Institute is dedicated to empowering 
women to start or expand their businesses, and that is through 
education and training, networking and business counseling. 
Although the Women's Business Institute has been in existence 
for a 5-year period, it wasn't until July 1, 1999 that we were 
awarded a grant by the Small Business Administration Office of 
Women's Business Ownership in order to expand the businesses in 
the rural areas. We also received additional funding through 
the Appalachian Regional Commission to continue this work, and 
the success of winning the SBA grant was due in part to the 
efforts and support of Congressman Roscoe Bartlett.
    As Women's Business Institute's Technology Representative, 
I provide one-on-one business counseling as well as e-mail and 
telephone counseling to women entrepreneurs. It is from this 
experience that I share this testimony.
    Access to resources. We receive many calls from women 
entrepreneurs from Annapolis to Cumberland. Many need 
assistance in some of the basic factual items in starting a 
business from where do I obtain license and permit as well as 
how to take an idea and convert it to a business concept. At 
the same time, we are asked to assist them in developing their 
business plans and reviewing and understanding cash flow 
statements. However, many of the entrepreneurs that we work 
with and meet with do not know how to use the Internet, and if 
they do, they are not familiar with or comfortable with 
searching for information.
    The resources available today is a lot more than it was 13 
years ago when I started my technology business, and at that 
time, we only had access to one book in the library on business 
planning. So what I demonstrate to the entrepreneurs are 
different Web sites where they can access resource information. 
This can include information from patent and trademark to where 
do I obtain business license and permits, also to demographic 
information such as from the Census Bureau. The on-line 
business resources can provide entrepreneurs with tons of 
market research, also directories and statistics as well as 
identify who their competition is.
    Many of the owners are not familiar with auction sites, so 
they are not accessing the on-line resources in order to obtain 
supplies or equipment for their business if they have an 
established business.
    There is also a lack of mentors as well as support for new 
and expanding businesses, but there is a surplus of proteges. 
Although many organizations offer mentor programs, by matching 
a mentor with a protege, the training on expectations and the 
continual commitment is often lacking. Oftentimes, the length 
of time of a request of a protege for a mentor is far too long. 
So the potential solutions that we offer are several. The 
resources are out there. But they are not reaching the 
consumer, and in this case, the entrepreneur.
    Like any business, the government needs to make a concerted 
effort to do the following: market the sites where they provide 
that information; make the information visibly available in 
public places, such as the library system or State and county 
economic development offices; you can also include information 
in the government mailers. We receive information from the IRS 
as well as the Department of Labor. Distribute information to 
civic and entrepreneurial organizations, whether it be the 
Chambers of Commerce or the home-based business associations, 
and also create a pool of readily available mentors with 
particular skills and specialties or offer the mentor some 
incentive for full participation in assisting a protege.
    In the area of education and training, it is necessary to 
have some access to basic affordable training for women. Many 
women-owned businesses fail because of lack of training and 
education. They need the ability to have the opportunity to 
practice their creativity, confidence, as well as sales and 
marketing, and topics such as human resource development, learn 
how to ask questions, how to maximize networking opportunities, 
and how to determine their fee structure also make a big 
difference to the success of their business.
    Web site--the development maintenance and marketing of a 
Web site to gain more business. Studies reveal that small 
businesses, with 500 or fewer employees, indicate that 30 
percent of them believe that the Internet is important to 
achieving their business goals. However, these businesses also 
believe that the cost, the security and the difficulties in 
implementing and maintaining the sites need to be addressed. 
Although small businesses represent 98 percent of all small 
businesses in the U.S., only 31 percent of them with 100 or 
fewer employees have a Web presence. Many women are not 
comfortable in working with numbers. This is absolutely 
important when operating a business. They have difficulty 
calculating their start-up costs, their monthly expenses, their 
cash flow statements and forecasting sales.
    So what are the solutions? We can develop additional 
workshops making them affordable and accessible to women; you 
can also provide more forums like the Women's Business 
Institute's Entrepreneurial Workshops where successful 
entrepreneurs can share their women business ownership story 
and experiences with those interested in starting a business, 
and also to provide small grants for the purpose of 
establishing Web site presence for increased marketability of 
their Web sites, would greatly assist women entrepreneurs.
    In the area of access to capital, a recent study reported 
by the Small Business Administration Office of Advocacy found 
that after controlling for differences in creditworthiness and 
other factors, the Hispanic-owned businesses were not 
significantly more likely to be denied credit and African 
American-owned businesses were about as twice as likely to be 
denied credit. Interestingly, both of these groups were more 
likely to withhold a loan application for fear of denial.
    There are also many myths about grants. There are special 
programs for women as well as minorities, and many women who 
contact the Women's Business Institute feel that they should be 
privileged and be given a break, so they call us to obtain 
grants. They are always surprised to find that the grants are 
very focused as far as programs, that they require grant 
writers, and that the award of the grants oftentimes takes a 
lot longer in a time frame than entrepreneurs arewilling to 
wait; and also many of the businesses being started are not nonprofit 
organizations.
    So the solutions we offer are to dispel the myths about 
grants. If there are truly grants out there and not just the 
marketing of a book of where to obtain grants from, provide the 
sources, what areas, what are the qualifications. At the same 
time, it would be good to know when businesses should look at 
refinancing a business loan or a combination of solutions, to 
help them grow their business, continue special programs geared 
toward women entrepreneurs and make them readily accessible and 
also understandable.
    I hope these challenges described in this testimony can be 
addressed and that these solutions also be considered. Once 
again, if any of these ideas are implemented, the government 
needs to think of ways to increase the exposure of the 
solutions to its target audience, and in this case, the women 
entrepreneurs.
    Thank you for the opportunity to appear before the 
subcommittee today and I will be pleased to answer any 
questions that you have.
    [Ms. Wirth's statement may be found in appendix.]
    Chairman Bartlett. Thank you very much for your testimony, 
and now Mr. Mayer.

    STATEMENT OF GLEN MAYER, CORPORATE SUPPLIER, DIVERSITY 
              COORDINATION, UNITED PARCEL SERVICE

    Mr. Mayer. Good morning. My name is Glen Mayer with United 
Parcel Service, and I am the coordinator of the Supplier 
Diversity Program and the testimony is actually inside the book 
that you have there. It is inserted inside the booklet.
    On behalf of the more than 340,000 men and women of UPS, I 
thank you for inviting UPS to participate in these proceedings. 
UPS has long been committed to promoting business opportunities 
among women-owned enterprises. In fact, one of our longest 
standing vendor relationships is with woman-owned LPS 
industries, a supplier of UPS packaging products. From 20 years 
ago, they did $10,000 a year with us to last year, they did $25 
million a year.
    It is evident that women-owned businesses have made 
enormous strides in recent years. However, the potential for 
continued growth is great and can be attained through 
collaborative efforts between individual entrepreneurs and 
corporate and government partners. Through our association with 
such organizations as the Women's Business Enterprise National 
Council and the National Association for Women Business Owners, 
UPS has expanded its commitment to meet the growing needs of 
today's businesswoman. Our network of more than 100 women-owned 
suppliers continues to grow.
    This growth is fueled by more than 200 UPS supplier 
diversity advocates around the country who participate in women 
and minority business councils on a national and local level. 
As our involvement with these groups continues to increase, so 
does the success of our program. Taking an active role in 
programs developed by such organizations as WBENC, NAWBO, the 
National Minority Supplier Development Council, and the Native 
American Business Association allows us to remain visible to 
potential business partners.
    It also is an excellent vehicle for three critical 
components of a successful program, or any government program, 
you need accessibility, you need communication and you need 
outreach.
    The various trade shows conferences and events are a great 
way for suppliers to become familiar with our program. This 
year we will distribute nearly 10,000 applications at trade 
shows and conferences alone. And that application is going to 
be accompanied with a conversation about UPS, our program and 
what opportunities there may be to do business with us.
    That is 10,000 face-to-face contacts. Once again, it is 
extremely important whether you are a private business or the 
government to interact with your suppliers.
    Ease of entry also is critical to a successful program. At 
UPS the procedure for entry into the program is designed to be 
supplier-friendly and aims to address any questions at the 
beginning of the process. Only certified companies are allowed 
in our program and we do not self-certify. Once a supplier is 
in our network, we work to align them with the units of our 
company that would most likely be able to use the products and 
services they offer. We have also added another layer of 
convenience to the process by making our application available 
on-line at www.community.ups.com.
    Mentoring and development initiatives are also key 
components of a successful program. A commitment to helping 
suppliers grow their business is essential. Once suppliers have 
proven themselves, we work with them to become a better 
business and a stronger partner. Development assistance at UPS 
includes everything from mentoring to sponsoring our suppliers 
to attend top schools, such as Kellogg and Tuck School.
    On occasion, we have provided executives to assist business 
associations in the areas of technology, finance and record 
management.
    We have also introduced firms to other corporations that 
may need the services they provide. The UPS approach to 
supplier diversity will continue to focus on interaction and 
communication. And we will continue to aim to establish long-
term successful business partnerships. We know that the 
continued success of women-owned businesses is vital to the 
American economy, and doing business with women-owned firms 
makes good business sense. We look forward to continuing our 
support of women business enterprises nationwide and applaud 
them on their many successes.
    Thank you for your time.
    [Mr. Mayer's statement may be found in appendix.]
    Chairman Bartlett. Thank you very much for your testimony.
    Mr. Davis, let me turn to you for your first questions and 
comments. Thank you.
    Mr. Davis. Well, thank you very much, Mr. Chairman, and let 
me just indicate that I really appreciate all of the testimony, 
and it seems to me that each one of the witnesses really have 
their fingers on what the problems are.
    Ms. Henderson, you mentioned that commitment at the top of 
agencies have proven to be, perhaps, the most effective way, or 
the most discernible impact that we have seen in terms of 
businesses actually contracting or working with smaller 
businesses or women-owned businesses. And at the same time, Ms. 
Ward, in your testimony, you talked about the difficulty of 
having some top agency or top CEOs or people really understand 
the lay of the land relative to doing business.
    How do either one of you, or both, think that we can change 
those attitudes and those practices? I mean, what do you think 
will best work to change those attitudes and practices which 
are humanistic? And it is not really something that you can 
push a button and get a response or get an action. It is not 
like the Internet. It is something a little different. What do 
you think we can do to change those attitudes?
    Ms. Parker. I will respond first to that. I think one of 
the observations they have made is that you do tend to see an 
awful lot of activity in terms of very high executive level 
individuals, both in the public and the private sector that do 
network and have access to women's organizations and minority 
organizations as well. Unfortunately, a lot of that activity is 
what I would consider to be ceremonial.
    And so what you have are very high profile activities where 
you know at the end of the event everyone feels very good about 
having had the discussion and having learned something. But 
what is really lacking is the follow-up. The one example that I 
gave you, which was very striking to me because it was 
indicative of what I have seen over and over again and that is, 
you have an official that is part of a panel, part of an event 
that is representing an organization or a company or whatever, 
and for the benefit of that particular event, there is a lot of 
goodwill that is discussed and so on. What tends to happen 
after that, a month, a couple of weeks, whenever, the follow-up 
is not there and in my case, things that I have seen are, 
people who, very aggressively at a conference, ask me to please 
follow up, please call me, and they wouldn't even take my 
calls, and that happens a lot. It happens a lot.
    So I think there are event opportunities that are 
occurring, but I think what really needs to happen is for the 
follow-up to occur. The follow-up not just from the standpoint 
of I talk with you and you talk with me, but you hear very 
impressive statistics in this room, and these are public 
figures that all of us have talked about. I think we still need 
to keep hammering home the disparity, factual disparity of what 
is happening and put a human face on what is happening.
    It is very easy to hear these things, a lot of people don't 
associate them with; they are actually people's lives that are 
being impacted by these decisions or the lack of decisions, and 
you hear 40, almost 40 percent of the businesses are women-
owned, and then you talk about 2 percent of contracts, you talk 
about less than 3 percent overall. Someone really needs to take 
a look at that and put a human face on what that means, how 
many people don't get jobs, how that equates to the people that 
have to have public assistance as a result.
    Put a human face on it so that it does hit home, and also 
make people accountable. I would ask the question of, if I 
spent almost 20 years in corporate America. If I had had those 
kinds of numbers in the programs that I measured, managed and 
was measured against, I wouldn't have had 20 years in corporate 
America. I would have had a very short career.
    And so how do we make people accountable for those kinds of 
things, I think it is follow-up, and it is constantly getting 
that message out that there is a down side to not doing the 
right thing, and our economy is impacted by it. It is not just 
Suzane Parker doesn't get a contract or Laura Henderson doesn't 
get a contract; it hurts the growth of our economy as well. How 
do we connect all of those so that people see what is really 
going on?
    Ms. Henderson. We have struggled with this, and certainly I 
have talked before Congress for over 20 years about this issue. 
I know we struggle with finding a solution. I think one of the 
things we have to do is educate the people at the top of 
organizations and have them make contracting with women-owned 
businesses a priority. We need to hold them accountable: there 
need to be consequences if they don't meet their goals: and we 
need to identify very specific actions. I think one of the 
exciting things of the study that the Council's doing with the 
National Foundation for Women Business Owners, looking at over 
5,000 who actually have gotten government contracts. What can 
we learn from these companies? What was different with them 
from other firms? What specific actions can we take?
    I think one of my greatest disappointments being on the 
National Women's Business Council is the fact that when I go to 
the Interagency Council on Women Business Owners, we do not 
have agency heads. We have people very low in the organization 
who come to those meetings. And I think Congress should ask the 
agency heads why, if this is a priority they do not attend. I 
think the people at the head of organizations, and I think 
people in Congress, have a voice and an opportunity. They need 
to have vision about how to make change happen, but we need 
very specific doable, tangible actions that people can 
implement.
    Mr. Davis. And let me just say, because I think all of us 
have had essentially the same kind of experiences, no matter 
what it is that we testify to. What brought me to my question 
was just last evening I had dinner with two CEOs of major 
enterprises. One private, one semipublic and another person who 
was trying to talk about getting business, and he kept making 
reference, he says well, you know, Mr. So and so, who is the 
CEO of so and so corporation, told his people to let us in and 
they let me in and I am now doing $25 million worth of business 
with them a year.
    The guy on the public side, well, sir, he says now, and all 
I want you to do is tell your people, and the guy says wait a 
minute, I can't do that. And so my question is, are there any 
policies, because I think part of our problem is that we deal 
in contradictions all of the time. I mean, are there any 
policies and practices that you can think of from a 
governmental vantage point or position that is actually 
prohibiting or inhibiting the ability to move beyond this 2.4 
percent that we are talking about as opposed to moving closer 
to the 5 percent, which is not that great in the first place?
    Chairman Bartlett. If the gentleman would yield for a 
moment, in a former life, I was competing for government grants 
and contracts, so I am very familiar with your problem. Let me 
ask a question and then make a brief point. Once a woman-owned 
business has gotten a contract, is it much easier to get that 
second contract and the third one?
    Ms. Henderson. My company does about, I would say, between 
$15 and $17 million of government contracts in a year, and the 
answer is yes.
    Chairman Bartlett. So breaking in was the problem.
    Ms. Henderson. I think breaking in is the problem, but it 
is not merely breaking in. You break into one part of one 
agency.
    Chairman Bartlett. That is true; you have got to fight that 
battle.
    Ms. Henderson. Exactly. I think another major issue we face 
is the issue of bundling, especially in DOD, because we all 
know that being a subcontractor brings you very little quite 
often, except a lot of work on the front end and no return on 
your investment. So the ability to get prime contracts is very 
important. I think the issue of the old boys' network, which is 
what maybe you were talking about last night, is an issue that 
we face, not that we can't get the information on an RFP, but 
getting the context in which to write our proposals, getting 
the information on the political environment, the issues that 
are very specific to, you know, a certain procurement is 
something that comes from relationships, not from writing.
    And so it is very difficult to get in. It is very difficult 
to move from the civilian agencies to the Department of 
Defense. It is just an enormous regulatory load. It is the most 
regulated business in the world, I think. And it also requires 
an enormous ability to wait. Many of the procurement 
opportunities that we have involve submitting a proposal and 
waiting up to 2 years for the award. How can a firm hold the 
staff, how can a firm start work the day after they award it? 
They award it, they have waited 2 years and they say now you 
are supposed to start working and you are supposed to have the 
resources in place. It is a very complicated process.
    Chairman Bartlett. May I make one point and return to Mr. 
Davis. I think that the problem is not so much discrimination, 
but just the nature of the beast. These contract people are 
very comfortable dealing with people that they have dealt with 
before, and I understand that because if they let a contract to 
a new company and there is not a good performance, then they 
get bad marks from their supervisors. So they are very likely 
to let contracts to people they have let contracts to before, 
because they have a comfortable relationship with them, they 
have a good track record with them.
    I had that difficulty because I did not get my degree at 
one of the universities, at the peoplewho were passing judgment 
on the grants and contracts that I was applying for, and these were all 
medical research kinds of things, got their degrees at these 
institutions and so I had, like you, to break in. I did that. But it 
wasn't easy. Once I had that first contract and that first grant, and--
but you are right, you must jump these hurdles in every agency you deal 
with. It is not that you have established a good track record over here 
that it is going to help you with this other agency. You have got to do 
it all over again.
    I don't know, Mr. Davis, what the answer to that problem 
is, but it is not just a problem for women. It's not just a 
problem of minority women or minority-owned businesses. It is a 
problem with everybody that is trying to break in because you 
are new, you are trying to break in. And there is hope that 
this will change. It is changing. I noticed that last year it 
was 1.8 percent. This year it is 2.4 percent. If you look at a 
percent increase that is not 5, but even if you go from 1.8 to 
2.4, that is a pretty decent increase for a year.
    And so we are on our way. I don't know how to solve this 
problem, and I think it is just a systematic problem of the 
institution, not so much any act of discrimination. But 
whatever it is, we have got to solve the problem and that is 
why we are here.
    Mr. Davis.
    Ms. Henderson. Could I respond to that? In the early days 
of my company, I had to hire a male negotiator. So while I 
agree with you, I think it is more complex. When I tried to 
negotiate, and I am a tough negotiator, I was being accused of 
crying in negotiations, which I never did. I know when I cry. I 
have been accused of being pushy, unreasonable for trying to 
negotiate very reasonable things. When I would send in a male 
with exactly the same stands on issues, it was very different. 
So while I agree with you, there is another factor that is 
playing there, and all of us women who do government 
contracting know the importance of the facts. In fact, in our 
meetings, we often sit around and say, ``Is this a meeting we 
can send women to or is it one we have got to send men to?''
    Chairman Bartlett. They are comfortable working with men.
    Ms. Henderson. Exactly.
    Chairman Bartlett. What we need are more women on the other 
side of the table, and I hope we are getting there, too, in the 
government.
    Ms. Neese. Can I respond to a couple of things? Laura is 
absolutely correct. At Terry Neese Personnel Services in 
Oklahoma, we have a little over $5 million contract with just 
one agency, and we don't even want to try to go out and break 
into other ones, because by the time you get the bid, and spend 
the time putting all the paperwork and everything together, you 
get the award. You have got to go work on it instantaneously. 
That means you probably have to hire more people to go and 
fulfill the award, and then, I am in the temporary business, I 
have to do payroll for all those workers every Thursday. So 
that payroll may be $200,000, $300,000 Thursday morning, and 
then I don't get paid on that contract for 90, 120 days or even 
longer. So the Prompt Pay Act, is there a Prompt Pay Act?
    Chairman Bartlett. There is a penalty for not paying 
promptly. If they are not doing it, let us know.
    Ms. Neese. And the other thing I would like to speak to is, 
I think it is all about leadership, and the President's 
executive order, I think, is a good executive order, and if you 
haven't read it, I encourage you to read it, and I think that 
you should move forward and make sure that it is implemented. 
When the president or the CEO of Lucent Technologies or UPS or 
the President of the United States of America says look, I am 
calling all my people in, we are going to reach this goal, or 
we are not going to have jobs, period. In my opinion, it is all 
about leadership.
    Mr. Davis. I agree, but I think, I guess it is a little 
different, and I was trying to compare the President of the 
United States with the president of UPS or Lucent, and I think 
there are a few more restrictions like 435 of them here, and 
another hundred over on the other side, and yet I understand 
and I agree that leadership is vitally important.
    The other question, Mr. Chairman, and I really appreciate 
your approach to this, because you, too, I don't think that you 
were a back-slapping, glad-handing kind of guy who got any 
contracts on the basis of that, and I think one of the reasons 
they appreciate this committee is because there is an effort to 
really thoroughly look at situations and try and determine 
whether or not something can happen beyond the quid pro quo. 
And this kind of business that we have all lived with so much 
and that has been such an integral part of life, and so I 
really appreciate your approach to it.
    Recently we marked up in our committee a whole group of 
small business initiatives, the President's New Markets, one 
bill that I am a primary sponsor of, the Business Links 
Program, and Ms. Wirth, I wanted to kind of ask you if you 
think this approach, what it does is exactly what you are 
talking about, it just gives the Small Business Administration 
some money to do it, to establish business-to-business 
relationships, smaller businesses with larger businesses, and 
the Mentorship Protege. How effective do you think that really 
is?
    Ms. Wirth. I think it probably needs a little bit more 
time, and once again, the exposure to the entrepreneurs that it 
is there and how it works. I think that for small businesses, 
to be able to access that particular program and also, what 
Susan spoke about as far as follow-up, is important. Many of us 
have spent our days participating in different functions with 
procurement, Department of Treasury has a large one every year. 
They are excited when they meet us, you know, one-on-one, and 
then we call them as follow up and there is no return call.
    I think business links could work, but once again, its 
exposure to the entrepreneurs to let them know it is out there 
and what the benefits are.
    I would also like to say that as a prior 8(a) certified 
company under SBA, we are one of the 55 percent of 8(a) 
companies that never received a government contract at all, and 
the Baltimore Sun had cited that a couple of years ago, and I 
think that is really sad that the program is in existence, and 
it doesn't work.
    Mr. Davis. And finally, because my question is actually--go 
ahead.
    Mr. Mayer. I was just going to add that this is kind of a 
rehash of what I just went through with Georgia. The State of 
Georgia had the same problem and they had asked if UPS would 
sit, the governor asked us to help them run a supplier 
diversity program, in essence, in their government, and going 
through all the things that you just mentioned, you know, what 
are the problems at the top and everything, they talked through 
the whole process there, and it all came down to 
administration, setting the tone, holding them accountable, 
just all the things that have just been mentioned right here. 
But the end result of private industry or public you know our 
company's out there working with government; it really rests at 
the top, and then putting in the accountability guidelines.
    Just like at UPS, I have guidelines and goals that I have 
to reach. Some are set by the government because you have some 
contracts with us. Now if we don't reach those, then we near 
trouble. Well, this is the kind of the reverse that you need 
those accountability guidelines put in there, and I am anxious 
to see how this works out, because the Georgia governor 
intends, Governor Barnes intends on taking it to the other 
States and working with the same type of problems that you have 
here.
    Mr. Davis. The last point is just I followed Lucent and UPS 
for a long time, especiallyLucent, I used to live right across 
the road from the big Western Electric plant. Plus, I studied Lucent 
when I was studying psychology in terms of the Hawthorne studies, and 
all those things that increased productivity and satisfaction, and so I 
am not surprised. I mean, because Lucent does have a history of being a 
progressive company or corporation, and, of course, UPS, the 
involvement with the welfare to work, and Rodney Carroll on loan to 
help run that for the President. Plus, we have got an excellent program 
that we work with UPS out of Chicago, and so I appreciate both your 
companies in terms of what you have done in your own limited way to 
increase the diversification, but we have got a long way to go in terms 
of the Federal Government.
    Chairman Bartlett. Thank you very much. We have a few 
minutes before another single vote. This time it will be a much 
quicker vote because they are not taking a picture afterwards, 
and there are a number of things that I would like to get on 
the record, so we ask that you would stay for a very brief 
recess, then I will be back as soon as I can. That was just a 
15-minute bell. It takes us about five minutes to get from here 
to there, so we have probably got another 7 or 8 minutes for 
questions.
    Ms. Henderson, you mentioned that one out of eight of the 
women-owned businesses were women of color. Did I remember that 
statistic correctly?
    Ms. Henderson. That is correct, yes.
    Chairman Bartlett. That is about their percentage in our 
population is it not?
    Ms. Henderson. I don't know.
    Chairman Bartlett. I think what we are about, what, 12 to 
14 percent, so that is roughly the percentage in the 
population. Has that percentage come up dramatically recently? 
Are we doing better?
    Ms. Henderson. Actually, we see women of color starting 
companies faster than any of the segment of the women-owned 
businesses sector.
    Chairman Bartlett. So a couple of years ago it wouldn't 
have been one out of eight.
    Ms. Henderson. Exactly. We are just beginning to study 
that. In fact, the National Foundation for Women Business 
Institute did the first study on entrepreneurship among women 
of color, but it is something that we are looking at very 
carefully. I could get for you, if you would like to see it, a 
copy of the study the Foundation did, because not only did it 
look at women of color as a whole, but it broke down women of 
color by different minority groups, which you might find 
interesting.
    Chairman Bartlett. I notice Lucent did that. I was looking 
with interest at your breakdown. You have done a very good job. 
There were more of your contracts that went to women of color 
than to white women, correct?
    Ms. Keenan. Yes, that is correct.
    Chairman Bartlett. I was impressed with that. When I first 
saw Lucent, it was at this small business hearing, how did 
Lucent get here? Then I read your testimony and understood why 
you were here.
    Ms. Parker, you mentioned several problems that you 
personally had, and that you think that others have. One is the 
fear of rejection, it is just not nice to be turned down. I 
don't know how to get around that. I guess you just need to 
tell people that the answer is not always yes?
    Ms. Parker. Well, I think the whole idea of a rejection, no 
one likes to go through that, but one of the issues that you 
have is, when you have, as we were just talking a second ago 
about, the number of women of color that are entering the 
entrepreneurial ranks, I mean, there are discussions that are 
going on all the time about, where did you get your funding? 
What was the reception of the banks? And it is pretty well 
understood that you are going to get a cool reception, and we 
are not talking about, for the most part, individuals that you 
know are setting the bar low.
    We are talking about many of the people that I speak to 
that are entering the entrepreneurial ranks right out of 
corporate America. They have had very high executive level 
positions. They are very skilled individuals, but the 
experience is the same across the board, regardless of 
industry, regardless of interest or regardless of level, that 
they are coming into the business world. And so you are just 
not given consideration, you are not given a warm welcome 
whatsoever. You really do have to dig and scratch and be very 
tenacious to move forward.
    Chairman Bartlett. You know, in a former life, one of my 
jobs was, for 2 years, teaching medicine at Howard Medical 
School here in the city, and near the end of those 2 years, it 
finally dawned on me that I was no longer seeing people as 
black or white or Oriental, because we had a number of 
Orientals there. I was seeing them as bright or dull, friendly 
or unfriendly. I thought, isn't that where we need to get to?
    I hope that one day we can stop talking about persons of 
color, that we are all Americans, but I know we are not there 
yet, and to make sure we are not discriminating, we need to 
keep records. But I think the real goal is that we need, as 
Martin Luther King said, to be judged by the content of our 
character and not the color of our skin, and I don't know how 
we get there.
    I think we are making some progress, but there is still 
impediments, and we want to focus on those to make sure that 
they are removed as quickly as possible.
    Ms. Parker. Could I make a very quick comment about that?
    Chairman Bartlett. Yes, ma'am.
    Ms. Parker. The issue of the social righteousness of 
treating people fairly, I am not sure, unfortunately that we 
will ever get there. The impetus probably should be on 
enforcement, on accountability, because I think to assume or to 
wish that people are going to view everyone on an equal level, 
I mean, we have been struggling with this for many, many years, 
and I am not sure we are ever going to get there.
    Chairman Bartlett. I hope we get there, and on the way 
there, I know we have to do the kind of things we are doing 
today, but I genuinely hope we get there. There are a number of 
us already there, it is not everybody, but we need to keep 
working, and we need to keep records as we work to make sure 
that we are, in fact, getting there.
    I was impressed with the record of Lucent. You all are 
doing a great job. 9.5 percent of your contracts are with 
women-owned businesses?
    Ms. Keenan. No. Actually, let me clarify that. That is our 
minority and women-owned businesses. So it is a combination. I 
think a point of clarification for your past comment----
    Chairman Bartlett. How many of those are women?
    Ms. Keenan. The women numbers, the only ones that we have 
broken out is the white women, and that is the 461 million, and 
it is about 5 percent. Now within the remainder, because the 
remaining is minority business enterprises which are men and 
women, we don't split that out.
    Chairman Bartlett. But for women alone, it is 5 percent, 
which is where the government would like to get, and they are 
about 40 percent of the way there, a bit less than halfway 
there.
    Ms. Keenan. Right. And the other statistic that I did not 
include in the testimony is that our procurement to women-owned 
businesses has increased since 1997, by 25 percent. So when you 
were talking about where your trending is, ours has increased 
by 25 percent since that time, and we are at 5 percent now, and 
then we will be continuing to have stretch objectives going 
forward.
    Chairman Bartlett. I was impressed both with what UPS is 
doing and what Lucent isdoing, and once again, I noted that 
almost everything that can be done in the private sector and the public 
sector is done better in the private sector. Both of you are doing a 
better job than the Federal Government is and we are trying. It is just 
that big bureaucracies have a problem. And so I am really pleased that 
the private sector is leading the way here, and hopefully government 
will catch up. If you will give us a few minutes, we will recess the 
committee and be back as quickly as we can.
    Mr. Davis. Mr. Chairman, let me just say if I don't get 
back, it will only be because I have to be on the floor for the 
appropriations activities that are going on there, but if I 
don't, that is the only reason, because I am really enjoying 
this discussion. I think it is very meaningful and Ms. 
Henderson, you did mention one of our big problems and that is 
contract bundling. Something that----
    Chairman Bartlett. I will come back to that.
    Mr. Davis [continuing]. We have got to get real serious 
about doing something about.
    Chairman Bartlett. We have legislation.
    [Vote break.]
    Chairman Bartlett. I call our committee back into session. 
Just before the vote, we were talking about the bundling and 
the small business problems with bundling. This is an 
unintended consequence of downsizing some parts of government, 
particularly Department of Defense where we have had most of 
the problems. And since they had fewer people in procurement, 
they sought to have fewer procurements, and the way to do that 
was just to have one large contract rather than a lot of small 
ones. The first time we were introduced to that was with 
moving, and many moving companies are mom and pop shops, they 
may be affiliated with large moving companies, but the 
Department of Defense was going to contract with a single 
company to provide all of the moving for Department of Defense 
personnel country-wide. This obviously was going to eliminate 
most of the small companies.
    What had been done previously was they would have a 
competition and the low bidder would get it. So obviously no 
mover can move everybody in the military, but the winner got as 
much of the business as they could handle, and anybody else got 
the business at the same price of the winning bidder. So the 
government had the benefit of getting the lowest possible 
price, and also the benefit of having anybody come in, so lots 
of small businesses could participate in this program.
    We recently had a problem with the Navy and Marine Corps. 
They wanted to let a single contract for all of their 
communications and telephones that would have cut out lots and 
lots of small companies. We finally got an agreement with them 
that 10 percent of the price contract dollars would go directly 
to small business. Ordinarily, small businesses are looking to 
work for a prime, and we have legislation that looks at getting 
the money to subcontractors first by direct payment to 
subcontractors.
    So you don't have to wait for the 90 days that the prime 
waits for his money, and then the prime lets you wait another 
90 days for your money. And meanwhile, you are trying to meet a 
payroll every week, so we have legislation which will permit, 
require actually, direct payments to certain categories of 
subcontractors, so they don't have to wait for their payments.
    And a question was raised about whether or not there was a 
prompt payment law. Yes there is, and the government agencies, 
if they don't pay on time, they are supposed to pay a penalty. 
They have to pay at least interest like IRS, they ought to pay 
penalty and interest, shouldn't they? They do that to you if 
you are late, even if it is inadvertently late.
    Terry, you mentioned the death tax. We vote on that 
tomorrow.
    Ms. Neese. Good.
    Chairman Bartlett. It is not what I would like, which is to 
eliminate the whole thing now, but at least we are starting 
down the road where it will be eliminated. The problem with 
this is to construct a bill that is not perceived as a tax 
break for the rich because that is going to be vetoed, and the 
truth is that the really rich don't need it, but there are a 
whole lot of people who aren't rich who really need it, and 
somehow we need to craft legislation to get us over that 
hurdle, and I hope we are doing that. We will see whether we 
get there or not with this legislation.
    You also mentioned the cash versus the accrual basis for 
accounting. We had an IRS person at another hearing, and if 
your gross receipts are between 1 million and 5 million a year, 
the government has the option of either accepting whatever 
method you choose, or requiring you to use a different method. 
If you are over 5 million, you have got to use the accrual 
method, as I understand it. If you are less than a million, you 
can use whatever you want, and of course, most people use the 
cash method.
    In questioning, it became obvious that at the end of the 
day, the amount of tax collected would not be one cent 
different, whether you paid your taxes on a cash method or an 
accrual method, and our question to the IRS was why are you 
then harassing our small businesses? If at the end of the day, 
you know, when they finally--and I had the company for 10, 12 
years, and when I retired, and I liquidated the company, and 
the taxes that I paid would have been exactly the same no 
matter what I had done it on an accrual basis or cash basis, 
and he agreed that was true.
    Why then is the government harassing our small businesses? 
We really need legislation, and there is legislation there, I 
don't know whether it will make it through committee and on the 
floor this year, but there really is a need to have legislation 
that prohibits the IRS from harassing our small businesses. If 
the taxpayer would get additional revenues by that, then you 
might see some justification for that, but not a dime different 
in the amount of money that is ultimately collected; why are 
they doing it? This is very difficult to understand why they 
are doing that. So we hope that we can solve that problem.
    The installment sales problem, another big unintended 
consequence, our fault we passed legislation. It just wasn't 
clear, and it permits the practice if you sell something, and 
most people can't pay for it all at once, that the tax 
collector says that you owe it, just as you owe the tax, just 
as if you got the money all at once, and so I hope that that 
will be corrected by appropriate legislation.
    I would have thought that IRS would have had the discretion 
to have interpreted the legislation another way, because none 
of our people saw this as an unintended consequence of the 
legislation, but the IRS certainly did.
    You mentioned paperwork. We are trying to add IRS to the 
SBREFA panel process. You know, the only two agencies involved 
in the SBREFA panel process are the EPA and OSHA, and the 
testimony the other day indicated to us that the average small 
business owner spends more of his time complying with 
regulations from IRS than either OSHA or EPA, and so we ought 
to be including the agency that is the biggest burden on our 
small businesses in the SBREFA panel process.
    What this process does is to require that in the 
promulgation of new regulations, that they consider the effect 
on small businesses. They have to do that and they have to have 
a hearing process. They have to have a comments process. They 
have to answer to the Congress, and we have a watchdog out 
there, the Office of Advocacy, and if you are not acquainted 
with Jerry Glover, who heads that office, he is a genuinely 
good guy. When he says ``us,'' he is talking about small 
business. When he says ``them,'' he is talking about the 
government. He is about theonly government guy I know that when 
he comes and says I am from the government, and I am here to help you, 
you don't start laughing.
    So we are trying to solve these problems.
    Is there specific legislation--you mentioned a resolution 
encouraging our government agencies to become aggressive in 
achieving the 5 percent goal. We will see where that resolution 
is and what can be done to get that out, because I can't 
imagine anybody opposed to that resolution. It is not binding. 
It is just a sense of the Congress that this is a good idea, 
and it has been a goal for a long while. Why don't you get with 
it. The Senate has already done it, I understand.
    Ms. Neese. Senate has already done it. It passed 
unanimously, and the resolution here authored by Congresswoman 
Sue Kelly has been languishing in committee now for about a 
year and a half, which is pretty unbelievable. Like you said, I 
would think that that piece of legislation would pass pretty 
quickly. I don't know why anybody would be opposed to it. So if 
they are going to bury it and not pass it on, then let us get 
another one authored and get it through committee and get it 
out to the floor so we can vote on it.
    Chairman Bartlett. After a year and a half, it is probably 
more than languishing, it is probably dead.
    Ms. Neese. That is what I figured.
    Chairman Bartlett. We will see what can be done to 
resurrect it.
    Ms. Neese. Good. Thank you very much.
    Chairman Bartlett. What is a certified company, Mr. Mayer? 
You don't self-certify. What is a certified company?
    Mr. Mayer. Certified is what the NMSDC, National Minority 
Supply Development Council, WBENC and NWBLC, they actually go 
and do a site certification. They actually go to the business 
to make sure it is not a storefront. We don't go to all the 
businesses that would come in. So instead, we only take 
certified companies because we do not want to deal with 
storefront companies, pass-through companies, which are just 
saying they are maybe women-owned or minority-owned and they 
really aren't a full-fledged company.
    Chairman Bartlett. You have 1,800 women-owned suppliers?
    Mr. Mayer. Yes.
    Chairman Bartlett. Out of how many?
    Mr. Mayer. Out of about 40,000, but of the 40,000, 25,000 
are small businesses. I don't know in that how many are 
minority small businesses. I just know that we have 1,800 non-
small business women-owned businesses.
    Chairman Bartlett. You don't know how many women-owned 
businesses are in the small business category?
    Mr. Mayer. Out of the 10,000, there is quite a few in 
there.
    Chairman Bartlett. Okay. You mentioned that UPS has a 
practice of, on occasion, sending consultants, some of your 
people, to work with the small business to help them solve some 
of their problems.
    Mr. Mayer. Right, right. We mentor with small businesses. 
For example, there is a package company in Atlanta that we had 
a purchasing executive actually work with them over 4 years and 
took them from--he was a second tier company. Because he was 
very small, he won a $2 million contract as first tier in about 
4 years, but grew his business working with him.
    Chairman Bartlett. I just wanted to put on the record an 
example that is really not small business. I guess it was a 
small business before they started, but now it is not a small 
business. Garden State Tanning, which is a company in 
Williamsport in our district that makes leather for upscale 
Toyota cars, and they were having great difficulty in meeting 
their deadlines, and they were having to air freight the 
product to Japan. Whatever profit they might have made went to 
the company that was air freighting the product. And so Toyota 
sent several of their people over to help them reorganize their 
plant at no cost.
    The result of that was now that for at least the last 2 
years, they have gotten two awards from Toyota. They have 
decreased costs and increased quality. Ordinarily, you can do 
one of those at the expense of the other, but they have both 
decreased cost and increased quality.
    So I was really impressed with how effective a bigger 
company could be in helping a smaller one when they saw what 
the problems were. They came over here clear from Japan, spent 
time in the factory and helped them reorganize. It wasn't any 
new equipment, by the way, it was just reorganization, just how 
to better organize, to do the work, and it didn't cost Garden 
State anything more than to be a very efficient company than it 
was costing them to be an inefficient company. It was just how 
to do it better, so I want to commend you on recognizing the 
value of working with these small businesses.
    Do any of you have any final comments you would like to 
have on the record? Yes.
    Ms. Henderson. A couple things. Related to the Prompt Pay 
Act, and this would be enormous to all small businesses, but 
especially women-owned businesses, the Prompt Pay Act does not 
cover cost reimbursement contracts. It only covers time and 
material and fixed price contracts. If the Prompt Pay Act could 
be extended to cost reimbursement contracts, it would make an 
enormous, enormous difference.
    The other thing in relation to Mr. Davis' comments about 
Mentoring Proteges, the National Women's Business Council did a 
survey across the country of business owners and learned that 
women business owners take advantage of Mentor Protege programs 
to a much greater extent than men do. So your focus on creating 
those kinds of programs also would be of great benefit to 
women.
    Chairman Bartlett. Thank you. Other comments for the record 
before we adjourn the meeting?
    Ms. Neese. I just want to be sure and urge you to look at 
the recommendations that come out of this National Small 
Business Women's Summit in Kansas City this last Monday, and I 
think there will be some great ideas focused around 
procurement. We had a very, very heated discussion with the DOD 
who was present, and on the premises for the meeting and there 
were a couple hundred women who spoke very passionately about 
procurement. So I feel there will be some excellent 
recommendations coming out of that summit.
    Chairman Bartlett. Were the procurement people from DOD men 
or women?
    Ms. Neese. Men.
    Chairman Bartlett. We need some women procurement people in 
DOD, don't we?
    Ms. Neese. Both men were taken to task for their lack of 
outreach, whether true or not.
    Chairman Bartlett. Well, if there are no other comments, 
thank you all very much for your testimony. The meeting is 
adjourned.
    [Whereupon, at 12:45 p.m., the subcommittee was adjourned.]
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